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Inventory Forecasting

The Inventory Forecasting software helps users in inventory planning. Previously named Predictive Purchasing, Inventory Forecasting is a powerful tool that helps in demand forecasting. It calculates the quantity needed to cover anticipated sales, ensuring that you buy all that you need, and what you need only.

Inventory Forecasting considers all these factors:

Considering all these factors, Inventory Forecasting generates a Suggestion of the ideal quantity to purchase in order to meet predicted sales, and it suggest the best vendor to purchase from.

Using Inventory Forecasting

To access Inventory Forecasting, go to PurchasingForecasting from the Goflow sidebar menu.

In order to access Inventory Forecasting, users must have the Inventory Forecasting role assigned to their profile. This ensures that only authorized users have access to sales analytics.

The Inventory Forecasting flow follows this general outline:

  1. Selecting a Comparison Period
  2. Selecting a Forecast Period
  3. Customizing Inputs and Recalculating Suggestions
  4. Reviewing and Creating Purchase Orders

Selecting a Comparison Period

The first step is to set a Comparison Period. This period will serve as the basis for historical data analysis, which in turn will be used for generating Suggestions. The timeframe you select should be based on what makes the most sense to you. You may select the most recent quarter, or the same time last year as the Forecast Period.

To set the Comparison Period, click on the date-picker in the top bar under Comparison Period.

Customizing the Comparison Period

Adjust the Comparison Period to improve the accuracy of historical sales trends. The objective in refining the Comparison Period is to attain a more representative average. This historical average serves as the basis for generating Suggestions. To attain a more representative average, customize the Comparison Period in order to eliminate outliers and focus on relevant sales data only.

To customize, click on Options in the top bar under Comparison Period. Apply these filters:

Calculating the Average

The Average Sales per Day is determined by dividing the Total Sales by the number of days in the Comparison Period. When calculating this average, a key decision is whether to include Stock-out Days, or days when the product is considered to be out of stock.

There are two approaches to stock-out days, and each affects the Average Sales per Day:

To include No-Stock Days, select it in the Options menu in top bar under Comparison Period. If you decide to exclude Stock-Out Days, you can also define the No-Stock Threshold.

The threshold defines the minimum quantity level below which a product is considered out of stock. The threshold aligns with the inventory allocation safety levels, which are designed to prevent overselling. For instance, your inventory allocation settings might consider a quantity of 2 as out of stock. The Days In Stock figure indicates the number of days within the Comparison Period during which a product was in-stock, as determined by the No-Stock Threshold.

Selecting a Forecast Period

The next step is to specify a Forecast Period, which is the timeframe you intend to cover with your purchase. This timeframe could be for the next quarter, the quarter after that, or for an upcoming holiday season.

To set the Forecast Period, click on the date-picker in top bar of Inventory Forecasting. Select the duration of the period in Forecast Days, and select the date of the Forecast Start.

For each product, Inventory Forecasting will automatically assign its default vendor and default vendor Lead-Time. You have the option to keep the default vendor and lead-time or select a different vendor and customize the lead-time. You can make these updates for an individual product, or if you want to apply the changes to all products, you can do so through the Vendor and Lead-Time column headers.

Stretching the Forecast Period

Lead-time is the number of days it takes from the time a purchase order is sent to a vendor until the goods arrive at the warehouse. For each product, you can choose whether to keep the default vendor lead-time or set a custom lead-time. The lead-time on a product affects the Suggestion. For products with extended lead-time, where products are not expected to arrive before the start of the Forecast Period, an adjustment will have to be made to account for the days when products will not be available for sale.

There are two approaches to account for the effects of extended lead-time:

To stretch the period, simply choose a Start date from the Forecast Period menu in the top bar, and leave Forecast Cutoff empty. If you prefer to keep the Forecast Period fixed and reduce the Suggestion instead, select a Forecast Cutoff date, which fixes the last date of the period, beyond which the forecast will not be extended.

You may choose of combination of both approaches. You can set a Forecast Cutoff that extends beyond the Forecast Period, but the number of days after the period is fewer than the number of the longest Lead-Time.

Customizing Inputs and Recalculating Suggestions

After Inventory Forecasting generated its initial Suggestions, you can continue making adjustments. You can adjust the Projected Growth, change Vendors and Lead-Times, modify Comparison Options, and apply Filters. After making changes, click the Recalculate button to generate updated suggestions.

Applying Product Filters

To further refine your purchasing decisions, use product filters. These filters enable you to customize which products are included in the Suggestions. Use these filters:

Reviewing and Creating Purchase Orders

Inventory Forecasting generates a Suggestion for each product using various factors. To enhance your understanding of the calculations, you can add additional columns to the report. Not all columns are shown by default. To display more available columns, click on the columns icon located in the upper-right corner of the report. Place a check next to each column you wish to display, and an X next to any column you want to remove. For an explanation of each column, click on its tooltip.

The Suggestion will automatically populate the Quantity to Purchase field for each product. You have the option to either accept the final suggestion or manually input a different quantity as you see fit.

For products where the default purchasing unit of measure is greater than each, the Quantity to Purchase is rounded up. For instance, if the Suggestion is 11, but the default purchasing unit of measure is a dozen, the Quantity to Purchase will be rounded up to one dozen, equivalent to 12 units.

Once you are satisfied with the numbers, you are ready to create purchase orders:

  1. Select the products to purchase. You can manually select the products one by one, or you can check the top of the column to select all suggested products for purchase.
  2. Proceed to Review Purchase Orders. This page is divided into two sections. The upper section lists all the vendors for whom you will create purchase orders. Click on a vendor to view the products included in the lower section. If you need to make any adjustments, click on the Back button to return to the previous step and make the necessary changes.
  3. When you are satisfied with the contents of a purchase order and it looks good to proceed, click on the Review Purchase Order button. This action will open the purchase order for your review.
  4. At this stage, you have the opportunity to make any last-minute updates to the purchase order, if needed. Ensure that all the details are accurate, and proceed to Save the purchase order and to Send it out to your vendor.

Forecasting for Kit Products

If you sell kit products, you can include in the forecast report projected kit sales, and get suggestions to purchase the children products required to create the assemblies. To include non-purchasable kits, select Include Required Assemblies in the Options menu in top bar under Comparison Period.

When required assemblies are included in the forecast, the children products of non-purchasable kits have two types of needs: Needed for Kits and Needed for Child. These two figures are taken into calculation, and ultimately produce a single Suggestion. Click on the kit icon next to the Suggestion to view the breakdown details.

To illustrate, consider SKU ABC-2PK, a non-purchasable kit consisting of 2x the standard product ABC. If the prediction indicates 10 sales for the standard product ABC and 10 sales for kit ABC-2PK, the combined Suggestion will be for 30 units of ABC. This includes 10 units needed for ABC itself, and an additional 20 units needed for assembling 10 kits of ABC-2PK.

This option applies specifically to kits marked as non-purchasable. Such kits are not purchased directly from vendors; rather, they are assembled in your warehouse using the children products that are purchased separately. Kits marked purchasable are included in the forecast reports like all standard products.

Glossary of Inventory Forecasting Terms

These terms are used in the discussion of Inventory Forecasting. Some of these terms are used as column headers or selectable options within the Inventory Forecasting report.